The event that changed my career happened on December 14, 1996, at precisely 6.30 a.m. I was commuting. The radio was on. I wasn’t paying attention until these words hit me like a sock to the jaw: do not go to your grave with your music still inside you. Then the idea burst into being.

I was in a very powerful position at Johnson & Johnson. The buck stopped with me. I had the appearance of success but knew in my heart I was only playing a game. After twenty-five years with the company, I had achieved success beyond my wildest expectations. Through those years I had developed the skills to do two things really well: project execution and inventing. I held fourteen patents. I knew what I was doing.

Just because you’re excellent at creating ideas and executing projects doesn’t mean you’ll be equally talented at selecting the right project or portfolio of projects.

Fortunately, this was recognized within my organization, and I was promoted to vice president of engineering – the first engineer in the company to reach the VP level. Along with the oversight of global new manufacturing technology, I was also responsible for selecting top projects.

However, I soon recognized a faulty assumption: Just because you’re excellent at creating ideas and executing projects doesn’t mean you’ll be equally talented at selecting the right project or portfolio of projects. In fact, I was working in a kind of fog. Project execution was easy by comparison. It’s defined and linear, and the process is highly refined and repeatable. But there was no clear process or criteria for selecting one project over another, or one portfolio versus another. And to make matters worse, the complexity or working within a gigantic, multinational enterprise like Johnson & Johnson was confusing to say the least. After five years as a VP I came to the conclusion that no one human mind could grasp the complexities and dependent factors required to do my job of choosing the right projects.

What do I mean by a project? This is an initiative with four properties: it has an objective. It consumes resources. It has one or more activities. It has an endpoint. With the exception of funds allocated to make and sell products and services, almost all of a company’s resources are spent on projects.

A portfolio is a group of projects. Before even getting to the question of why we are engaged in our current portfolio of projects, we have to realize what they are. And in such a complex business environment, few leaders can see what initiatives are in process let alone judge their effectiveness. How was I to make decisions that were best for the company under such circumstances?

For larger projects I was required to get the approval of an executive committee, but that became almost a rubber stamp. I was the decider. I listened to those requesting funds for their projects, each trying to convince me of the merits of their ideas. But we were all working without the knowledge of what else was going on. Imagine your doctor prescribing a drug without understanding what other drugs you’re taking. This was the situation I found myself in – open to persuasion without a rational basis of decision making. Of course, all the people who were trying to persuade me to fund their projects had vested interests in the project rather than the overall health of the company. To them success meant getting their projects approved.

Project portfolio decision making is not simply deciding to do A or B. That’s classic problem solving. Project portfolio decision making is choosing which opportunities serve the needs of the organization and deliver the greatest value. Strategic management is the deployment of finite resources to generate flows of cash over the long haul. The very definition of economics is allocation of scarce assets. Every company is trying to do more with less. In better economic times there was a much higher margin of error. But today, companies are finding the cupboard bare. Resources are severely limited. There are many hungry children and not enough food to feed them all.

I was under constant pressure to make the right selections. Only in hindsight do I see the decisions I made were rarely based on the arguments brought to me. I did what looked best for me and what gave me the best chance of advancement. I know I’m not the only one. My job was supposedly to maximize value for the company, but in reality, I had no idea how to do this. There was no infrastructure in place for me to be able to see what was going on and to make rational decisions. Consequently, all I had to go on was intuition. Now, that’s not to say intuition is a bad thing, but it’s not enough, and in a complex circumstance it can be downright dangerous. When we rely on intuition alone, we are limiting ourselves. All we have then are heuristics – rules of thumb. And these are likely to be inappropriate. Who hasn’t suffered from perceptual bias? We believe, see what we want to see, and then ignore all the rest.

I was confident there had to be a better way to make corporate decisions. It was a problem to be solved. The voice on the radio was my guide. I would make it my life’s work to create a better way. I resigned from Johnson & Johnson that morning.

I spent the next eighteen months at my kitchen table, searching for the path forward. My search confirmed there was no known solution available for project and portfolio selection.

Much later, I was giving a PPM presentation to William McComb, former CEO of Liz Claiborne. At the time, he was the president of a large healthcare company. At one dramatic point he jumped on the boardroom table and said to his managers, “I’ve been wanting a capability like this my entire career. I want to implement the process, starting tomorrow. Whoever is in disagreement with me, please step up here on the table and tell me why we shouldn’t do this”.

The improvement process began across the entire organization two days later. My experience shows that every organization struggles with the same problem.

Getting project portfolio selection right matters. You are expected to know what you’re doing. That’s your job. So how do you understand the scope of all the projects available at any one time? What method do you use to anticipate contingent factors? In other words, what impact will the projects you select have on each other? How do you even know what the contingent factors are?

Any financial analyst will tell you performance is no guarantee of future returns. Relying on past experience presupposes a static environment. But today the world of business is dynamic and complex. One thing we do know is the future is unlikely to look like the past.

A Fish in Your Ear: The New Discipline of Project Portfolio Management:  Volume 1: Amazon.co.uk: Menard, Michael, Richards, Christopher, Menard,  Melissa: 9781475299359: Books
Extract taken from Michael Menard’s book, A Fish in Your Ear, The New Discipline of Project Portfolio Management. Available on Amazon.